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A review of the state operating budget

Now that we’ve had time to review and digest the state’s new 2013-15 budget, how did lawmakers do?

As with all budgets there are good and bad items included, though the biggest policy success was that lawmakers allowed the 2010 “temporary” tax increases to remain temporary and to expire as promised on July 1. The enacted budget also includes revenue and spending projections that balance in compliance with the state’s new four-year balanced budget requirement.

There were many interesting provisions amongst the operating budget’s 483 pages. A few of the highlights:

• A study of growing higher education costs;

• A study of whether the state’s economic development programs are effective;

• A study of how teachers actually spend their time during a typical school day;

• A pilot program to modernize the state’s antiquate financial management system;

• A provision requiring the state’s expansion of Medicaid under Obamacare to terminate if the level of federal matching dollars drops;

• The state assumes it will generate $30 million in savings from “LEAN” management reforms;

• Washington State University is required to study whether citizens are harassing government officials with public records requests;

• State employees are granted a conditional 1 percent pay raise if certain economic conditions are met, plus a new step on the wage-increase ladder is created; and

• The budget continues to take money from the dedicated voter-approved Initiative 900 performance audit account set aside for the State Auditor.

The 2013-15 budget shows general fund state spending of $33.487 billion, but the actual budgeted authority for agency spending is $33.627 billion. This is because the 2013-15 budget assumes $140 million in agency reversions (approximately $70 million per fiscal year), money agencies are authorized to spend but are not expected to, based on historical experience. Lawmakers assume state agencies will not use all their budgeted spending authority, resulting in actual spending of $33.487 billion for the 2011-13 budget period. Should agencies, however, spend to their full legal appropriated amount, the unrestricted ending fund balance would be a negative $87 million (not counting total reserves).

Up against the July 1 deadline to avoid a first-ever government shutdown, lawmakers wasted no time in voting on the 2013-15 budget once they had reached an agreement. Unfortunately, this meant the public had little time to digest the details of the 483 page, $66.5 billion dollar proposal before lawmakers voted on it. If they were completely frank with the public, lawmakers would admit that few of them had time to read the budget before they voted on it. This lack of a transparent process was best summed up by veteran Tacoma News Tribune columnist Peter Callaghan, when he sent a tweet after the 45-second press conference at which lawmakers and Governor Inslee announced the final budget but provided no details:

“All say this is how it has to be done, how always done. I have more time in than any of them and they’re wrong. Least transparent budget yet.”

Though it took more than 150 days (one regularly scheduled 105-day session and two special sessions) to complete their work on the 2013-15 operating budget, lawmakers succeeded in adopting a budget that complies with the state’s new four-year balanced budget requirement while keeping their promise to allow several temporary tax increases they enacted in 2010 to sunset.

The relatively small level of reserves, assumption of reversions in the balance sheet, significant fund transfers and uncertain expectations from the State Supreme Court on its K-12 McCleary ruling, however, will continue to create uncertainty over the state’s budget outlook and its long-term sustainability.

Additional vigilance will be required to ensure future spending increases in non-education spending are sustainable, as well as recognizing the reality that unfunded programs should be repealed rather than suspended to remove their projected costs from future budget outlooks.